Updated: Feb 19, 2019
Some expenditures are best covered with credit
I did not grow up in a household where we used credit cards. I saw my Mom pay bills in mostly cash, she would withdraw money from her bank account and proceed to pay for everything with cash because 1) I grew up in the 80’s and 90’s in Nairobi and that is what everyone did and 2) I don’t remember anybody having debit or credit cards then, they did not exist.
I maxed it out and barely paid the bills. Needless to say, my debt got reported on my credit and I did not fully understand the consequences of that decision until years later. when I got denied for loans, apartments, etc.
After that whole debacle, I swore off credit cards and for a long time managed to avoid them, by using bank debit cards. However I realized that credit cards are not the enemy, irresponsible use of credit cards is the enemy and credit cards do actually offer advantages over debit cards in some cases. There are actually 3 occasions I prefer to use my credit card over my debit card. Those occasions are;
I like to use my credit card when traveling for all purchases. That means that I can keep my savings in the bank as a backup in the case of an emergency. Imagine this scenario; you are traveling far from home, you lose your credit card but you need cash, if you have your savings safe in the bank then that cash is easily accessible. Alternatively, if you do not have a credit card and use your savings instead, then if you have an emergency while low on cash, you have fewer options available.
For the Points
I like to use my credit card for the points or cash back. With some cards on the market, when you make purchases, you actually get to earn some cash points which you can use for whatever you want. Some cards offer cash back and travel point and rewards. If you use the standard chartered gold card on fuel purchases, you can get up to 5% cash back, which you can then use for anything you want.
For the added protection
Most cards come with additional insurance. For example for car rentals. Some credit cards offer car insurance as part of the benefits, which can save you a bundle, as most car rentals require you to use their insurance which can be quite pricey. Also, some cards have baggage claim insurance. So imagine this scenario, you travel and when you arrive at your destination you find out your luggage is lost, what to do? Well if you have baggage claim insurance on your card, and used your card to purchase your ticket, it's as easy as filling out a claim.